The expansion will require further financing, with
Fortescue intending to “revisit the bond markets,” Sydney-
based analyst Peter O’Connor said in a note dated yesterday. In
October, Fortescue sold $2.04 billion of five-year notes, the
biggest sale of junk-rated dollar bonds by an Australian company.

The board of the Perth-based company is expected to sign
off on the expansion of output at its Pilbara operations in
Australia to 120 million metric tons from the current 55 million
tons before its annual meeting today.

When contacted by Bloomberg News, Fortescue Spokesman
Cameron Morse said it was premature to comment on the expansion
ahead of the board meeting. He spoke by phone from Perth.

Fortescue’s longer-term target to increase output to 155
million tons by 2017 is “aggressive,” O’Connor wrote in the
note. Plans to expand come amid rising iron ore prices. The
average price for ore delivered to China was $145 a metric ton
in the first half, according to The Steel Index. That’s more
than double the average $69 a ton for the same period last year.